Australian construction materials manufacturer Brickworks says it is confident about forward momentum despite a dip in first-half profit as a recovery in domestic housing starts continues to bolster demand in the company’s flagship building products business.
In a statement released on Thursday, the company said its underlying net profit after tax dropped 4.5 percent from $53.0 million in the six months to January 2013 to $53.4 million in the six months to January last year as the reduced earnings in the company’s investments in other businesses fell 17.8 percent and profits in its land development business contracted 3.3 percent.
The company’s flagship building products business, however – delivered a 37 percent increase in earnings before interest, tax, depreciation and amortisation from $14.0 million to $19.2 million.
Within this division, the Austral Masonry brand lead the way with a 91 percent surge in profit amid industry rationalisation and cost savings due to external restructuring.
Price increases and greater efficiency boosted Austral Bricks earnings by 15 percent, meanwhile, whist earnings from Austral Precast edged higher and Auswest Timbers delivered better earnings after the fire damaged Deanmill was recommissioned in July 2013.
Earnings from the Bristle Roofing business, however, dropped amid weak conditions in Victoria and WA – with sales of roof tiles in the latter having been impacted by a shortage of available tradespeople in roof tiling which has created a lag between the commencement of new detached houses and sales of roofing products in that state.
Going forward, the company is optimistic about the future, saying it expects further improvements in earnings as the full extent of the upturn in residential construction output flows through into sales and price rises.
“The emerging recovery in housing activity is now achieving real traction. Austral Bricks sales volumes in March are tracking more than 30 percent ahead of the prior year, building on momentum from February” Managing Director Mr Lindsay Partridge said.
“Sales across most other businesses are also tracking ahead of this time last year. If this momentum is sustained, the Building Products Group is well placed to deliver significantly increased earnings in the second half. We should also benefit in the final quarter as major capital projects come on stream, including the refit of the Bellevue brick plant in WA and an automated mesh welding machine at the Wetherill Park precast facility in NSW.”
The company declared an interim dividend of 14.0 cents per share, to be paid on 6 May.